Based on their enthusiasm, the company was rated as a 2 on the Zacks Research scale. Once again, and for those unfamiliar with the Zacks Scale, 1 represents a Strong Buy recommendation and 5 a Strong Sell. In terms of my reference to analyst enthusiasm, the 2 rating speaks for itself.

However, and despite popular opinion, the following Twitter exchange with Zacks Research (see below) shows that I am not alone in my concerns regarding SciQuest – although for different reasons:

Why does this matter? After all, if the stock goes up, or the stock goes down, does it really mean anything as far as existing or prospective SciQuest customers are concerned?

Not directly, but ultimately. This is largely because end-user clients are secondary chattel to those whose interest is tied to a company’s stock performance.

Think of it this way, the company has already raised the money it required when it went public. Once the stock has been sold, all future trading of those shares happens between parties unrelated to the business. Or to put it another way, and based on research[1], the operational cash flow of the business is completely separate. The business’s stock price only affects the business if they need to raise more capital by selling another stock offering.

This doesn’t mean that the company is oblivious to stock performance.

According to another source[2], when a company’s stock price is depressed, raising additional funds can become more challenging and costly. In fact, if the drop is significant, the company may have to borrow money – which in and of itself can present its own problems.

Another factor to consider is that a company’s executives likely have a considerable stake in the stock’s performance. This is why SciQuest CEO Stephen J. Wiehe’s repeated sale of stocks raised a red flag for me, as did the more recent departure of the company’s CFO. Do they both know something that the rest of us don’t?

In other words, is Wiehe’s deft use of a 10b5-1 plan“fortuitous coincidence” or, more in line with Bloomberg View columnist Matt Levine’s position regarding the legal use of inside information. Levine’s position isn’t all that surprising, as the use of inside information is fairly common. In an article titled CEOs Boast of Good Results, Then Often Dump Shares[4] , Michael Santoli wrote “insiders always have an information advantage, and often enjoy plenty of discretion over how to ration it out.”

You can review CEO Wiehe’s trades since 2011 on the Market Watch website [3], and draw your own conclusions relative to what it means, or doesn’t mean. Note, use the scroll bar at the right of the Transaction section to track his trading activity.

This brings us back to why both existing and prospective end-user clients should take notice.

For example, what if as reported in today’s Triangle Business Journal[5], SciQuest’s Wiehe is really looking to make an acquisition. Is it true that a near-term deal is unlikely because of the “significant gap between private company valuations and public company valuations” or, is a dropping stock price presenting the kind of funding challenges referenced above?

Depending on why the company CEO feels that he has to be on a “deal hunt”, but is not able to proceed for whatever reason, could pose a potentially serious problem for end user clients. Especially if said acquisition would bolster or improve the current solution offering.

Alternatively, could its dropping stock price mean that SciQuest would be viewed as a bargain, and therefore an attractive takeover target[6]? It is something to consider, especially if the right buyer comes along and sees the benefits of an immediate increase in market share and, also has the ability to dramatically improve the company’s overall solution.

If you are a current SciQuest customer, what might this mean for you. If you are considering SciQuest as a solution partner, in what way will knowing the above impact your decision?

Personally, and at this point, this is only gut instinct based on my past first-hand experiences, something just doesn’t feel right with SciQuest. Only time will tell if my concerns are warranted, and how much my instincts are on the mark.

In the meantime, as the reality of the SciQuest report begins to sink in, we are likely to see an increasing number of analysts move from a buy position, to a hold position.

If you are considering SciQuest as a possible solution provider, you may be well advised to do the same.

]]>https://procureinsights.wordpress.com/2015/07/31/sciquest-the-big-dip-or-the-big-sleep-by-jon-hansen/feed/0SciQuest CliffprocureinsightsSciQuest July 31 15SciQuest Zackstake a step backWhat’s on the menu? Should industry analysts and bloggers have to reveal their revenue source? by Jon Hansenhttps://procureinsights.wordpress.com/2015/07/30/whats-on-the-menu-should-industry-analysts-and-bloggers-have-to-reveal-their-revenue-source-by-jon-hansen/
https://procureinsights.wordpress.com/2015/07/30/whats-on-the-menu-should-industry-analysts-and-bloggers-have-to-reveal-their-revenue-source-by-jon-hansen/#commentsThu, 30 Jul 2015 20:49:21 +0000http://procureinsights.wordpress.com/?p=19022]]>

“Analyst objectivity and accuracy is an issue that is frequently debated.Much of the criticism appears to focus on the business relationships between analysts and the technology providers that are the subjects of their research. In short, analyst firms often rely heavily on revenues from the technology providers they cover.”*

In yesterday’s post, I revealed the source of my revenue, including the fact that it is mostly derived from clients who are not in the procurement industry.

Based on the example of the reader comments that follow, while this disclosure was welcomed, it also raised an issue that has plagued our industry for some time. Specifically, and under the present revenue model, do analyst and blogger insights provide the complete picture?

“Nice article. I like that you expanded a little on your role and your revenue stream, as I feel there is a tendency for people to be cynical and complacent when they read genuine investigative journalism.”

Even though it is an important question, it is the answer which comes in the form of successful implementations that ultimately matters.

Given the high rate of eProcurement initiative failures, the answer would appear to be no.

There are many reasons for the high rate of failure, not all of which should be born by those covering the industry. Let’s face it, end-user clients must also own up to the role they played, in terms of the initiatives that ended up on the rocks.

This being said, would these set-backs have been avoided – or at least minimized, if the end-user market were more aware of the potential conflict of interests referenced in my opening paragraph excerpt?

Think of it in this way, you go into a restaurant and you are given a menu from which to order. Based upon what is put in front of you, you make your selection.

Even though you may have enjoyed what you had selected, how would you feel if after the meal, you found out that the menu you received listed only 10 to 20 % of the available items? What if you noticed that there was something on the expanded list that you would have preferred?

Now imagine if you didn’t enjoy your meal and discovered the same thing . . . but couldn’t get your money back?

In many instances, this latter example represents the end-user market’s experience in terms of their past eProcurement solution choices. In short, they trusted the analysts and bloggers menu list, and walked away disappointed.

Even when the analysts and bloggers provide coverage of a vendor, there is still a tendency to potentially omit important information. This was demonstrated by my coverage of SciQuest and Bravo Solutions. The paucity of electronic ink that was dedicated to the NIGP #CodeGate story should also be noted here, since many vendors use association events to connect with potential customers. Of course there are considerable benefits for me personally in terms the above situation, as my readership has almost tripled over the last few months.

I am however not certain that the greater good of the industry is being fully served, given that multiple sources of reliable information, creates and maintains the necessary checks and balances that ensure the ongoing vitality of coverage.

“This post fits right in with the questions you raised about why other media outlets did not pick up the NIGP story. Fear of ‘biting the hand that feeds you’. It’s also why Procurement Insights continues to grow in popularity…. open, unbiased assessments and willing to ask the hard questions and do the right research.”

At this point, some of my fellow analysts and bloggers may acknowledge (okay maybe not), that while their general admission coverage may be left wanting in terms of providing a complete picture, their premium pay-to-access commentaries will deliver all that you will need to make the right decisions. Without tangible proof, should you take their word at face value, and pony up the bucks?

Let’s say you do, how do you know that you are getting the complete story? Once again, I am not just talking about their actual list of companies being covered, but the extent of the information being provided.

Using our menu analogy once again, what if the item you selected had some form of peanuts in it, but it wasn’t listed? What if you were allergic to peanuts?

Like the old saying, what you don’t know can definitely hurt you.

So where do you go from here?

While a full disclosure of revenue source will not provide an end all, be all solution, it will at least help in that you will be able to have additional information through which to filter the analysts and bloggers research and related commentary.

“The thrust of my comment was more aimed at organisations that charge users for access to their content but don’t provide objective value as they also charge the providers so the commentary may be biased. I encountered this first when selling casting software and dealing with the organisation responsible for casting in the UK. They would not review our product as the only main competing product was a sponsor. Hence they provided little real benefit to the members.”

All this being said, as an end-user client, you need to adopt a buyer beware mindset. This means that you take ownership for scrutinizing all sources of information – this blog included, so that you are always in control of your own destiny.

]]>https://procureinsights.wordpress.com/2015/07/30/whats-on-the-menu-should-industry-analysts-and-bloggers-have-to-reveal-their-revenue-source-by-jon-hansen/feed/0Menu image 1procureinsightsscrutiny eyeWho is footing the bill for your market intelligence? by Jon Hansenhttps://procureinsights.wordpress.com/2015/07/29/who-is-footing-the-bill-for-your-market-intelligence-by-jon-hansen/
https://procureinsights.wordpress.com/2015/07/29/who-is-footing-the-bill-for-your-market-intelligence-by-jon-hansen/#commentsWed, 29 Jul 2015 13:23:14 +0000http://procureinsights.wordpress.com/?p=18992]]>In my interview with Shel Israel back in 2010, we discussed how Twitter would monetize its growing popularity. The segment was aptly titled Can Twitter Make Money.

For those who are unfamiliar with Israel, he is one of the country’s foremost authorities on social media, having co-authored the book Naked Conversations, How Blogs are Changing the Way Businesses Talk with Customers with Robert Scoble. Scoble of course is also a notable presence (and force) in the social media world.

Israel also wrote Twitterville: How Businesses Can Thrive in the New Global Neighborhoods.

During the discussion, Israel talked about the fact that in the then emerging social media world, the monetization of platforms such as Twitter would not occur through it’s users, but through sponsorships. You can listen to the applicable excerpt of my interview with Israel below.

Similar to the implications of the credit card commercial’s admonishing question “what’s in your wallet,” the possible answer or answers are fraught with conflicting interests. The problems related to conflicts arising from the influence of a medium’s revenue source, is that it can potentially undermine the market’s ability to discern between credible information and paid hype.

What I found most interesting regarding the above reader comment, is that he talked about having “the temerity to raise/challenge” my concerns regarding the ThomasNet – Walmart deal in a “public domain.”

While I was obviously pleased that Procurement Insights was the only one to bring this, as well as other stories of importance, to the public’s attention, it was also somewhat troubling for the reasons highlighted in my response.

This raises the question . . . why, as many have suggested, is Procurement Insights willing to go where few if any go in terms of covering the tough stories?

It is something to think about.

While this blog has sponsors, the price range to become one is $250 to $1,000 per year. With 24 in total, it works out to being a very small percentage of my overall revenue. Nor does sponsorship include a promise of favorable or watered down coverage, as demonstrated by the ThomasNet story above, or my assessment of Elcom (as a former sponsor, I guess everyone isn’t going to be a fan of such an approach).

So from where is the majority of my revenue derived? Speaking engagements and ghost writing.

With speaking engagements, I am not paid to seek consensus or gain audience approval relative to having to bend the news to suit their agenda. What audiences want is factual, well researched insights that will inform and empower them.

From a ghost writing perspective, while there are a couple of procurement-related clients, the majority are from other industries such as dental, financial and, more generally, the FP500 executive world.

In short, I cover the procurement world because I have both a background and a passion for it, as opposed to relying on the industry for a livelihood. Interestingly enough, it is my interaction with those from other sectors that has given me a greater insight into our profession, and a corresponding objectivity.

At the end of the day, and as discussed with Shel Israel and lampooned by John Oliver, someone does have to foot the bill for supporting the various platforms and media outlets through which you obtain your news and market intelligence. The question isn’t one of why, but who?

Who pays for analyst firms such as Gartner or blogs such as Spend Matters? Who picks up the tab for associations such as the NIGP? It is in knowing the answer to this question, that you will ultimately be able to truly assess the veracity and value of their insights.

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]]>https://procureinsights.wordpress.com/2015/07/29/who-is-footing-the-bill-for-your-market-intelligence-by-jon-hansen/feed/2Capital One 3procureinsightsWalmart LinkedIn CommentsWhat do Ariba and SciQuest have in common? by Jon Hansenhttps://procureinsights.wordpress.com/2015/07/28/what-does-ariba-and-sciquest-have-in-common-by-jon-hansen/
https://procureinsights.wordpress.com/2015/07/28/what-does-ariba-and-sciquest-have-in-common-by-jon-hansen/#commentsTue, 28 Jul 2015 18:20:49 +0000http://procureinsights.wordpress.com/?p=18974]]>I have received numerous comments regarding my last couple of posts, particularly as it relates to a free press and the prevalence of native advertising or content. You should check out the John Oliver commentary on native advertising through the following link; https://www.youtube.com/watch?v=E_F5GxCwizc

In the meantime, the reference in yesterday’s post to the falling knife analogy got me to thinking. Specifically, is there a common characteristic relative to vendors like SciQuest, who are experiencing, or have experienced, significant market challenges?

Ariba almost immediately came to mind.

Here are the reasons why:

Both SciQuest and Ariba have had their fair share of notable failures. For SciQuest there are the Colorado’s and Oregon’s, and for Ariba there is the Ontario Education Collaborative Marketplace or OECM, to name just a few.

Following my posts of high profile client missteps, I received a call from interested (make that concerned) investment bankers and/or analyst firms, involved with both SciQuest (Pacific Crest Securities LLC) and Ariba (Craig-Hellum).

Both companies have posted losses on a fairly regular basis in their annual reports.

Both company’s stock prices share a seemingly similar end of roller coaster ride trending (see images below). On September 24th, 2010, SciQuest’s stock was priced at $12.27 a share. Despite a brief surge between 2013 and 2014 – when the stock hit a high of $30.41 per share, on July 24th, 2015, it returned to $13.32. In terms of Ariba, in December 1999 their share price was at $57, then in March 2000 the shares hit a high of $173, before finally closing at $45 on October 2012, when they were acquired by SAP.

Despite their being considered as classic examples of the “catching a falling knife” analogy, both have been/are acquisition targets. In 2012, Ariba was acquired by SAP, while most recently, it has been reported that SciQuest is a possible acquisition target for companies such as Oracle and IBM.

Now you might be thinking “sure, there are obvious similarities, but why should I care?”

Fair question.

Here is the answer . . . what the above shows us is that the real game being played out has little, if anything to do with producing positive customer outcomes, and more to do with maximizing share value – especially for the executives of the company holding the shares. The April 13th, 2000 article by Adam Lashinsky in TheStreet titled SciQuest’s Misadventure Is a Sign of the Times makes for interesting reading regarding this latter point.

Now one might reasonably think that customer success is a key factor in terms of increasing share price. One would think.

At the end of the day, while customer successes are nice, they are not as necessary as you hope. It is the new customer wins – or the potential for new customer wins leading to increased market share, that is most important. This is the real engine of perception that drives the solution provider community (and share price) – including it’s potential appeal as a possible acquisition target.

It is also the reason why native advertising or content is becoming increasingly important to solution providers such as SciQuest, in that analysts, journalists and bloggers covering the procurement industry are, as New York Times Executive VP Meredith Levien put it in the above referenced Oliver video, “sharing their story telling tools with the marketer.”

The fallout from this symbiotic relationship between those in the media and the companies they are covering, is that the end user ultimately foots the bill as a result of failed initiatives or problematic implementations.

This is why, in my response to one executive who had written me to let me know how much they liked my recent post, I wrote the following:

Far too many organizations equate a technical analysis or seek a Magic Quadrant-type endorsement as being the starting point for selecting a “solution,” when they should instead be seeking a partner. With the former, you rarely if ever, find a true partner because such analyses rarely if ever look at the people behind the company, or for that matter the company itself – such as if the executives are selling their stocks.

This of course requires a greater investment that goes beyond a features, functions and benefits analysis or, the hollow endorsements from existing clients. You will have to remind me one day to tell you the story about Multnomah County and SAP, in which the latter used Kings County as a key reference that did not turn out as expected.

The good news is that you ultimately have to be your own best filter. As I tell my readers, while I will strive to always provide thorough and insightful coverage of the industry, you should still challenge me as you should any source of information. If what I am saying is on the mark, it can and will ultimately stand up to scrutiny.

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]]>https://procureinsights.wordpress.com/2015/07/28/what-does-ariba-and-sciquest-have-in-common-by-jon-hansen/feed/0Oliver's GartnerprocureinsightsSciQuest Stock Performance July 15Ariba NasdaqSciQuest Stock: A falling knife or, a temporary point of resistance before a new high? by Jon Hansenhttps://procureinsights.wordpress.com/2015/07/27/sciquest-stock-a-falling-knife-or-a-temporary-point-of-resistance-before-a-new-high-by-jon-hansen/
https://procureinsights.wordpress.com/2015/07/27/sciquest-stock-a-falling-knife-or-a-temporary-point-of-resistance-before-a-new-high-by-jon-hansen/#commentsMon, 27 Jul 2015 14:56:25 +0000http://procureinsights.wordpress.com/?p=18942]]>

“Those who try to catch a falling knife only get hurt.” – old Wall Street adage

In a recent Nasdaq website article titled The 5 Biggest Stock Market Myths, reference was made to a study which concluded that “Most market prognosticators are notoriously inaccurate.” The article also went on to say that with the advent of the Internet, and the corresponding access to more information, “individuals have an advantage over institutional investors because individuals can afford to be long-term oriented.”

From my perspective, and even if I had not invested a significant amount of time over the past 10 years covering companies like SciQuest, the above would raise red flags. Specifically, analyst suggestions that SciQuest is just one point lower than a strong buy recommendation on the Zacks rating scale.

For those unfamiliar with Zacks Research, the scale is based upon a “simplified rating system,” in which the firm assigns a “number from 1 to 5 for each analyst rating, where 1 represents a Strong Buy recommendation and 5 a Strong Sell.”

According to Zacks, SciQuest is currently rated at a level 2.

The question is simply this . . . is it warranted?

If a picture is indeed worth a thousand words, the answer would be no.

Put aside for the moment the fact that most analysts – as well as industry journalists and bloggers – fail to provide complete or exhaustive coverage in terms of what is really happening in the industry, the above graphic in and of itself is telling.

On September 24th, 2010, SciQuest’s stock was priced at $12.27 a share. Despite a brief surge between 2013 and 2014 – when the stock hit a high of $30.41 per share, as of July 24th, 2015, it is now at $13.32. In short, and if we look at SciQuest stock performance over the past 5 year period, investors have traveled a great distance to basically end up where they had started.

Given the above, how could analysts – who according to the Nasdaq website article are “notoriously inaccurate,” recommend SciQuest as a “buy”?

This is where, in my research for this post, I came across the falling knife analogy.

Referencing two different company scenarios in which XYZ had hit an all time high of $50 per share the previous year, but has now dropped to $10 per share, and ABC company who, although smaller, has recently gone from $5 per share to $10, the question that was posed is which stock would you buy?

While the majority would buy XYZ’s stock, believing that it will eventually rebound to the higher level this, according to experts, is a “cardinal sin in investing.” The reason offered is that pricing is only one part of the total equation, and that seeking to invest in “high-quality” companies that are undervalued by the market, is the best way to go.

Looking at the above graph, into which category does SciQuest fall? A high flier coming down to earth or, an undervalued gem?

Based on my coverage over the past 12 to 18 months, the answer is fairly obvious.

Now you may wonder why those within our profession should be more interested in this information than say, the pay-to-access “analysis” by a Gartner, or anyone else professing to have the inside scoop. Of course when I say scoop in the context of traditional sources of information, what I am really talking about are the tired old analyses that ultimately mean very little in terms of meaningful outcomes.

The reason is fairly straight forward. While technological analysis has a role to play in choosing a solution provider, it doesn’t help you to chose the right partner. Specifically – and this is the reason why so many initiatives have failed in the past – traditional assessments do not take into account the company and the people behind them. Or as the Nasdaq article best put it, like stock price, technological insight by itself will not help you to identify the high quality company or companies, with whom you can and should work.

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]]>https://procureinsights.wordpress.com/2015/07/27/sciquest-stock-a-falling-knife-or-a-temporary-point-of-resistance-before-a-new-high-by-jon-hansen/feed/2SciQuest Stock Performance July 15procureinsightsSciQuest Stock Performance July 15Falling Knife MinionsThe absence of a “free press”: Is this why procurement industry coverage is so poor? by Jon Hansenhttps://procureinsights.wordpress.com/2015/07/25/the-absence-of-a-free-press-is-this-why-procurement-industry-coverage-is-so-poor-by-jon-hansen/
https://procureinsights.wordpress.com/2015/07/25/the-absence-of-a-free-press-is-this-why-procurement-industry-coverage-is-so-poor-by-jon-hansen/#commentsSat, 25 Jul 2015 17:31:11 +0000http://procureinsights.wordpress.com/?p=18917]]>The other day I received an e-mail from Fast Market Research under the heading “New Market Research Report: SciQuest, Inc. (SQI) – Financial and Strategic SWOT Analysis Review.”

When I clicked on the link – which I have included for you above, I was taken to a press release. You already know how I feel about press releases – in part due to the shenanigans of companies such as SciQuest – so I won’t expend any further cycles on the subject.

As I read through the text I came to the “Full Report Details” link and clicked on it.

I was then taken to another page, in which I was informed that I could order the full report for $300 U.S.

It was at this point that I asked myself the question . . . is this the reason why procurement industry coverage is so poor?

First of all, I have never heard of Fast Market Research. But even if I had, why would I pay for their report? Shouldn’t market intelligence be more readily available without cost? Especially when you consider that under this pay-to-see model, expert advice in the past delivered very poor results.

The fact is, industry coverage – true industry coverage – has to be freely and readily available, without influence, and subject to sound journalistic practices.

While I cannot comment on the SWOT analysis being offered by this particular source, because I haven’t read it, even if the information within its pages has value, it is diminished by the fact that you have to pay to get to it. It is no different than with blogs offering premium access, or for that matter a Gartner – and we all know how well that model has worked out for everyone.

Let’s face it, by and large, the absence of a free press has reduced industry coverage to just slightly above infomercial status. This is because what is and is not reported is subjective, and often times influenced by the all too chummy relationship between analysts and journalists, and the very vendors they are supposed to cover.

You simply have to compare Procurement Insights’ coverage of SciQuest, to those of other industry “pundits”, to see that there is something seriously amiss.

So what is the answer?

To begin, stop paying for reports such as the one offered by Fast Market Research, as well as premium access programs. Instead seek out those resources that provide free and open access to real industry news. When I say real industry news, I am talking about insights that will ultimately inform and empower you beyond the tired and familiar formats, with which we are all too familiar.

“We are not here to pass judgement – the suppliers can speak for themselves . . . it is up to them to decide” – Tom Greco, VP of Publishing Operations at ThomasNet.Com

It is rare that one receives the answer to a question in such a direct and concise manner, so as to remove any doubt in terms of discerning from where the other party is coming.

This is one of the many aspects of my discussion with ThomasNet.com VP Tom Greco that stood out when I talked with him about his company’s recent deal with Walmart. The conversation took place as a result of the concerns I had raised in my July 9th, 2015 post, in which I pointed to the fact that the majority of suppliers that deal with Walmart, likely come to regret it. It is also perhaps the reason why Walmart’s vendors were encountering problems in finding U.S. sources of supply, possibly leading them to seek the relationship with ThomasNet in the first place.

Like Tesco, who it should be noted was the subject of a July 20th LinkedIn article by Gerard Chick that zeroed on their reported mistreatment of suppliers, Walmart’s track record is equally unenviable when it comes to their relationship with their supply base.

However, and against the backdrop of the launch of the new ThomasNet.com Corporate Edition – the details of which I will cover in a future post – Greco made it clear that the company’s vast supply base that has been cultivated over the past 100 years, can stand on their own two feet. As a result stressed the VP, the company’s primary focus is on “bringing as many opportunities to our supplier network” as is possible.

But at what price opportunity?

While I understand Greco’s position, I am not sure that a disclaimer will prove sufficient if and when Walmart reverts to its old ways of dealing with suppliers after the honeymoon period is over. Let’s face it, ThomasNet is a rarity in the realm of supplier networks. Although concerns regarding the cost to suppliers in terms of listing on ThomasNet have been raised in some circles, suggestions that their suppliers are getting stiffed by high fees, or an inability to justify the return on their investment that is all to common with other supplier networks such as Ariba’s, is not as frequent.

Of course, the origins of the ThomasNet.com supplier network is quite different in that it goes back to the company’s founding in 1898. Back then (and up until 2006, when the switch was made to the present day online format), it was known as the Thomas Register of American Manufacturers, or “Thomas Registry.”

So while some may question the ThomasNet.com pricing model, there are few, if any, who have questioned the fact that “ThomasNet is a trusted resource for buyers looking for manufacturers and suppliers.” That trust however was not gained at the expense of its suppliers. This brings us back to my original concern regarding the Walmart deal.

While I am certain that not every single relationship that was brokered through ThomasNet has had a happy ending, you do not endure for more than century without having considerably more successes than failures. In this context, providing Walmart with access to a supply base of such pedigree could come back to haunt the company, especially if things go south. If they do, I doubt that ThomasNet suppliers will find comfort in the company’s disclaimer.

The only question I have is what took Walmart so long to discover ThomasNet and, why now? Perhaps it is in the answer to these questions that we will ultimately come to understand what the future is likely to hold for all concerned.

In the meantime, and as demonstrated by the following Twitter exchange with Procurement Ombudsman, not everyone agrees with my assessment of the deal;

So what do you think? Is the deal with Walmart good or bad for ThomasNet.com suppliers?

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]]>https://procureinsights.wordpress.com/2015/07/22/a-confident-disclaimer-from-thomasnet-vp-regarding-walmart-deal-by-jon-hansen/feed/0disclaimerprocureinsightsThomasNet Walmart Twitter ExchangeHighlights from my interview with Bravo VP Dan Warn regarding Ontario Government implementation by Jon Hansenhttps://procureinsights.wordpress.com/2015/07/15/highlights-from-my-interview-with-bravo-vp-dan-warn-regarding-ontario-government-implementation-by-jon-hansen/
https://procureinsights.wordpress.com/2015/07/15/highlights-from-my-interview-with-bravo-vp-dan-warn-regarding-ontario-government-implementation-by-jon-hansen/#commentsWed, 15 Jul 2015 12:41:51 +0000http://procureinsights.wordpress.com/?p=18854]]>Yesterday’s interview with Bravo Vice President Dan Warn was a fast but comfortably-paced discussion, in which the exec provided much needed insight into the Ontario government implementation, including the purported challenges highlighted in my recent posts.

The big question of course was whether or not Bravo has or had employed strong-arm tactics, by suggesting that the Ministry of Government and Consumer Services “MGCS” is mandating the use of their platform?

Specifically, the assertion of sources that ” . . . since the award Bravo has been running up and down Ontario broader public sector claiming that MGS has “mandated” that all public sector orgs switch over to it… even going so far to darkly hint that provincial funding could get taken away if people don’t transition to their platform. We’ve heard this from customers in healthcare, academia, school boards, etc – very strong arm sales tactics. Huge bully pulpit.”

The following is Dan Warn’s response:

“a bit of information that is not public is that they’ve (MGCS) have triggered phase II as of June of this year, so that all subsequent tenders need to be going out in that fully phase II on-line end-to-end format, which I think is significant given some of the things that you’ve shared in terms of adoption numbers.”

Warn then added . . .

“Bravo is very pleased with the win, and our investment to date to get through what is phase I – progressing into phase II, where we expect to see a significant uptick in the number of on-line tenders.”

But here is a key point relative to the mandate question . . . change management and adoption according to Warn, are being initiated and implemented by MGCS and, that said mandate only involve the 27 or 28 ministries who are under MGCS.

The mandate, as Warn would tell me, does not apply to the broader Ontario public sector.

Daniel Warn, Bravo Solution’s Public Sector Vice President

So there is a mandate relating to phase II of the program, in which the use of the Bravo platform will be mandatory for the 27 or 28 ministries that fall directly under MGCS governance. But this mandate does not extend to include those provincial organizations that fall outside of the aforementioned 28.

As for Bravo’s activities relating to the above message, as well as those of Deloitte – a consulting firm the company hired as they did not have the resources to reach out to the broader public sector – Warn stressed that at no time has either party indicated that the mandate that applies to the 28 ministries, also applies to the entire Provincial government. In fact he even added that he has never heard the mandate mentioned in relation to the broader public sector – at least not in any of the meetings with which he was involved.

There are of course some additional insights such as why Bravo hired Deloitte, MGCS responsibility in terms of the ultimate success of the implementation, and why the MGCS implementation is an important beachhead for the company.

Big corporations are constantly on the hunt for smaller startups that can fill a void. They not only look for innovative solutions but also companies that already have a strong presence and have scaled. – Innovation: Small Businesses Live It, Big Businesses Buy It by Mike Templeman, Inc. Magazine

One of the most interesting aspects of the reports from multiple sources that SciQuest is in play, and that possible suitors include everyone from Oracle and IBM, to Workday is, why now?

This is a dual-edged question in that it equally applies to both the intended target, and the possible companies looking to do an acquisition.

For example, why would a giant like Oracle, be interested in acquiring a relative minnow in SciQuest? According to some pundits, this would make no sense, as it falls outside of their purported corporate development model.

Once again, and keeping in mind that there has been no clear cut information one way or another regarding an acquisition of SciQuest, it is the somewhat dismissive tone of that logic, that I found to be most curious.

Generally speaking, and if you read the above referenced Inc. Magazine article, size does not matter when it comes to big businesses buying smaller ones. As the article clearly states, “Startups and small businesses are the heart that beats the lifeblood of innovation through the business world . . . no matter why you innovate, you can rest assured the business world will take notice.”

So why is innovation important, and why would it motivate a larger entity to buy a small player – even if that meant going outside of its corporate development model. Market Need and Timing.

In the context of the following excerpt from the June 2013 NASPO report ERP and eProcurement Systems, let’s consider a possible SciQuest deal from the standpoint of market need and timing:

“A final point to consider is that ERP vendors are updating their suites to offer their own, branded, eProcurement functionalities. Organizations should evaluate whether the functionality inherent in its existing ERP solution can meet their needs and weigh the loss of some features/ functionality against the costs and impacts of deploying and supporting a separate eProcurement system and the required integration. Organizations should also evaluate the development plans of the ERP system provider to determine whether they have a strategy and are investing to evolve their system to achieve the same best of breed functionality as their eProcurement system competitors.”

What makes this noteworthy is that states are looking for innovation in their eProcurement systems – ideally within their existing ERP platform. However, if that innovative capability cannot be found within their current ERP platform, the availability of separate or ERP-external, cloud-based solutions, provide a viable alternative. This is where players such as SciQuest, Unimarket and Bonfire etc. can make serious inroads.

However, and while recognizing that this option exists, there can be, as highlighted in the report, “significant drawbacks to operating separate from the entity’s primary ERP system.”

So while states have the option to go with eProcurement providers who offer innovative solutions outside of their present ERP system, there is likely an inclination to keep everything under one roof. As a result, it makes a good deal of sense for large ERP players to “partner” with smaller, innovative eProcurement solution providers.

If a relationship already exists, why buy SciQuest when you are already working with them, and have been for the past 9 years?

Market Need and Timing.

According to one public sector insider, while it’s difficult for a state to change ERPs, it is not uncommon if the one they are on is really old. The point that they were making, is that upgrading to the latest version of what you already have vs. going with a completely new ERP, might represent the same level of effort (and perhaps even cost). This is because the “really old” versions of an ERP don’t usually have a direct upgrade path to the new version.

What stood out for me was the reference to some current ERP platforms as being “really old.”

While the definition of old is in and of itself subjective – at 56 I am really old to my young children, but young to those who are in their golden years, Appendix I from the NASPO report (see below) is very interesting.

If you look at just SAP and PeopleSoft alone, there are implementations going as far back as 1998.

Beyond SAP and PeopleSoft, almost all of the states with competing ERP applications appear ready for an upgrade. The question is with whom will they do the upgrade, and how important is having a innovative eProcurement capability.

Taking into account the suggestion that it might be easier to make a change to a new ERP platform as opposed to upgrading an existing one, the implications are fairly clear; innovate in a hurry – especially in terms of an eProcurement capability, or risk losing a longstanding client.

Under such a scenario, it would make a great deal of sense to own the provider of said innovative edge, as opposed to simply partnering with them. After all, if they are a partner, they are free agents, and therefore able to hook-up with any other competitor. That is a risk that ERP providers might be unwilling to take, especially given what is at stake – control of the market for the next decade.

I learned this last lesson when I had two large players competing for a Department of Defence contract, and my little company was the one that provided a definitive competitive advantage.

Market Need and Timing

“I wonder if this is behind the motivation for SAP picking up Ariba and Oracle considering SciQuest. Staging for the future RFPs.” – industry insider

At the end of the day, it is hard to overlook or summarily dismiss the fact that a large percentage of old ERP systems that are currently in use, might be reaching their expiration date. This means that the potential for an ERP provider like an Oracle, to not only maintain their existing market share, but possibly expand it significantly in what is a narrowing window of opportunity, will likely trump holding fast to a corporate development model.

What do you think?

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]]>https://procureinsights.wordpress.com/2015/07/13/oracle-and-sciquest-when-market-need-and-timing-trumps-corporate-development-models-by-jon-hansen/feed/1market-timingprocureinsightsNeedNASPO ERP ReportVISA Panel Discussion: Building for the way the world should work and the Indian P2P economy by Nilesh Gopalihttps://procureinsights.wordpress.com/2015/07/13/building-for-the-way-the-world-should-work-and-the-indian-p2p-economy-by-nilesh-gopali/
https://procureinsights.wordpress.com/2015/07/13/building-for-the-way-the-world-should-work-and-the-indian-p2p-economy-by-nilesh-gopali/#commentsMon, 13 Jul 2015 11:57:44 +0000http://procureinsights.wordpress.com/2015/07/13/building-for-the-way-the-world-should-work-and-the-indian-p2p-economy-by-nilesh-gopali/In The Cloud:Last week I had the great honour of being part of a panel discussion at a VISA AP event in Mumbai, which was focused on the topic of Digital Transformation Driving Business Profitability for Corporates in India. In every such discussion, there are always what I would call highlight…]]>

Editor’s Note: When it comes to eCommerce and the evolution of the B2B supply chain, India seems to be at the leading edge of the transformation that is reshaping the way organizations do business both domestically as well as internationally. I think you will find this article interesting.

Last week I had the great honour of being part of a panel discussion at a VISA AP event in Mumbai, which was focused on the topic of Digital Transformation Driving Business Profitability for Corporates in India.

In every such discussion, there are always what I would call highlight points that capture both the theme and imagination of the subject matter.

These points, which break away from the standard thinking to blaze new trails of insight, are always powerful. The Mumbai conference was no different.

If you were to ask me to describe in one simple sentence the big take away from this panel, I would have to direct you to a famous Tweet by American entrepreneur, co-founder and CEO of the $2 billion enterprise cloud company Box, Aaron Levie.

In talking about Uber, Levie wrote that they were a “lesson in building for how the world should work…